China vendors corner India smartphone market

China-based vendors strengthened their grip in the India smartphone market, snaring 51.4 percent share of the smartphone shipment in Q1, according to IDC. They grew 16.9 percent sequentially and an impressive 142.6 percent over the same period last year.

In contrast, share of homegrown vendors dropped to 13.5 percent in the Q1 from 40.5 percent in the same quarter last year.

Overall, 27 million smartphones were shipped in Q1, a 14.8 percent growth over the same period last year. Unlike last year, shipment grew sequentially in the first quarter of 2017 by 4.7 percent recovering from demonetisation impact in Q4.

“Though homegrown vendors are making attempts to recapture the lost ground with new launches in sub-US$100 as well as in the mid-range segment. But intense competition from China-based vendors continues to be a major challenge and is expected to increase in coming quarters. Recovery of homegrown vendor is necessary for Indian smartphone market not only to fill-in the vacuum created for last few quarters but also to fuel the feature phone to smartphone migration,” said Jaipal Singh, Market Analyst, Client Devices of IDC India.

Vendors’ performance

Samsung saw 16.9 percent sequential growth in Q1, enabling it to maintain the leadership position. Shipment grew year-on-year by 21.7 percent. Multiple new launches in Q1 across price bands such as the J2 series additions, C9 and A-series (2017 versions) incrementally contributed over a million units to the already successful Samsung’s product line up.

Xiaomi secured 2nd place with 39.8 percent sequential growth. Two new launches — Redmi Note 4 and Redmi 4A — not only drove the volume growth for Xiaomi but also helped it to lead online smartphone shipments with 40.6 percent share.

vivo climbed up to 3rd place compared to its presence outside the Top 10 in the same period last year. Its shipment grew 44.2 percent over Q4 to secure 10.5 percent vendor share. All the new launches from this brand were targeted towards strengthening more than US$150 segment which is expected to be a high growth segment this year.

Lenovo (including Motorola) slipped to 4th as its shipment remained flat over previous quarter. However, shipments grew at a healthy 33.7 percent over Q1 2016. Contribution from retail and expansion of its presence in the offline channel has been challenging since last few quarters.

OPPO stands close to Lenovo group in vendor share but at 5th position. Shipments grew by 14 percent in Q1 2017 over the previous quarter and more than doubled over the same period last year. While OPPO’s online shipment saw marginal traction through its exclusive launches, it continues to be focused on the offline channel with aggressive marketing and channel support.

Overall mobile phone market shipment in Q1 was 56.6 million units with a marginal sequential dip of 3.2 percent. Feature phones registered 29.7 million units in Q1 with a 9.4 percent decline over previous quarter. While feature phone market remained flat over the same period last year, healthy growth from smartphones resulted in overall mobile phones market to post 6.5 percent growth in Q1.

Channel players in the smartphone distribution set up are taking a cautious approach regarding procuring the inventory for the second quarter due to expected implementation of GST from July 1, 2017.

“Apprehensions on lower tax credit and lack of complete clarity regarding the processes are the major concerns of retailers and city/state level distributors, which may lead to a limited inventory stocking, especially in the second half of June 2017. But this impact is expected to short lived as market is likely to attain normalcy in few months,” said Navkendar Singh, Senior Research Manager of IDC India.